Short Sale.. an Oxymoron..!??

By
Real Estate Agent with Keller Williams Realty

Short Sales - Increase the Odds of Closing with Experienced Professionals

A short sale is when a homeowner is trying to sell the home "short" of foreclosure, and the term "short sale" is extremely misleading and, really, is anything but that! They take time and can be very frustrating. And, only a small number even close. According to an August 2010 article in Bankrate.com, 1 in 5 offers turn into short sale closings. 20%!??  With numbers like that, it makes you wonder why even bother??  But, for those who are patient and have their ducks in a row, a short sale, for all of its challenges, can be an excellent way to buy a home.

What are the challenges to a short sale and how can you overcome them?

Challenge #1: Too many cooks in the kitchen. There are more parties involved in a short sale than in a normal purchase. You have the seller's lender who must approve the transaction. If the seller has a second mortgage or other liens against the house, that lender(s) will be involved. There may be private mortgage insurance on the seller's loan, which requires the insurance company to approve the transaction. Then, there are Realtors, the buyer's lender, appraisers, inspectors, and the title company. With so many people involved, you can see why just one hiccup can bring the transaction to a halt, or at least delay it.

Challenge #2: Changing numbers, disclosures, and paperwork. Throughout the process, numbers usually change. Perhaps the offer is too low for the seller's mortgage holder. Perhaps the mortgage insurance company requires the seller to commit to a promissory note to help defray some of the loss claim. Or even more elementary, it may be that some paperwork is missing or not returned in time, setting the process back.

Challenge #3: Uncertainty of closing. A buyer goes into a short sale unsure of whether it will go through. It depends purely on economics. Do the numbers support the "hardship" of the seller's financial situation? If not, the short sale won't be approved. For that reason, although a buyer may want to buy the short sale property, they often keep looking and may find something else in the meantime that can be closed on more quickly.

Challenge #4: Overwhelming volume. It's estimated that 11 million homes at the end of 2010 were underwater, making the short sale a growing last resort for many who simply cannot afford to stay in their homes, but do not want to experience foreclosure. The volume is immense and the process is complex.

Real Estate PROFESSIONALS are key to successful short sale closings

For such a complicated transaction, it's imperative that a buyer work with professionals who have done short sales before and can react quickly to meet deadlines or changes as they occur. They also must understand the process thoroughly so they can work through the complexities and communicate clearly with the seller and the seller's lender. That requires experience.

for "short" sale

Posted by

Britney Elizondo

Buyer Specialist, REALTOR® | Vicki White Homes | a team within Keller Williams Dallas City Center | www.vickiwhitehomes.com

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Show All Comments
Rainmaker
799,314
Robert Rauf
HomeBridge Financial Services (NJ) - Toms River, NJ

Patience certainly is necessary!

Buyers shopping for a SS need to be aware of the time constraints, and need to be sure they fit into their needs for housing as well, if you need to be in a home in a month or two, A short sale may not be for you, also if you are tight on qualifying, you also may want to consider a home that is not in the short sale process since you dont want rates to climb as you wait!

Mar 29, 2011 07:12 AM #1
Rainmaker
263,273
David Monsour
Keller Williams Keystone Realty - Gettysburg, PA
ABR - www.realty-insights.com

Perhaps it's time to start advertising yourself as a "long sale" specialist.  I'd probably keep a running ticker in your AR blog profile ;-).

 

That being said I'd just hand them off to an attorney.  My local guy said he closes about 50%, but the closing percentage is greatly increased if there is only one lien holder.

Mar 29, 2011 07:13 AM #2
Rainer
30,097
Virginia Gingras
West USA Revelation - Gilbert, AZ

This is not only an informative but also funny blog!  Good Job!

 

Mar 29, 2011 07:13 AM #3
Rainmaker
526,160
Dave Halpern
Keller Williams Realty Louisville East (502) 664-7827 - Louisville, KY
Louisville Short Sale Expert

Great points. The banks are inefficient which causes great delays.

Mar 29, 2011 07:25 AM #4
Ambassador
4,104,292
George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
Your Connecticut Mortgage Expert

Britney, as you said there is nothing short about a Short Sale.  They are not only frustrating, but they also require the patience of Job.

When a Buyer or Seller is involved in a Short Sale transaction it is very important for everyone involved to prepare them for what they will be going through.

Mar 29, 2011 08:04 AM #5
Rainmaker
549,665
Tom Burris
NMLS# 335055 - Baton Rouge, LA
Texas/Louisiana Mortgage Pro - 13 YRS Experience

The best you can do is prepare the client UPFRONT about the challenges.

 

Mar 29, 2011 09:06 AM #6
Ambassador
1,040,718
Steve Shatsky
Dallas, TX

Hi Britney... after seven years of working with short sales, I agree with you completely.  If patience is not a strong suit, save the heartache and avoid the short sales!

Mar 29, 2011 04:48 PM #7
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Rainer
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Britney Elizondo

Your Dallas Home Buying Specialist :: 940.453.5308
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